‘Godfather’ of technical analyst says the stock market could fall 20%
Prominent market technician Ralph Acampora says the recent bout of market volatility has him uneasy and now he’s forecasting a deeper drop in a market that has already delivered a significant bruising to Wall Street in the first few weeks of 2022.
“I really didn’t like yesterday’s action. That wasn’t cool,” said Acampora in an interview with MarketWatch late Friday morning from his residence in Minnesota, referring to an intraday reversal on Thursday — when the Nasdaq Composite Index
COMP,
was up 2.1% at its peak only to end down 1.3%. It was the second such reversal for the Nasdaq, and the folks at Bespoke Investment Group said that Thursday’s backslide marked the first time the Nasdaq Composite erased “an intraday gain of 1%+ and closed lower by 1%+ on back to back days in over 20 years.”
“That’s not climactic activity, that’s a reversal pattern,” Acampora said.
Acampora, who began his career on Wall Street in 1967, said that the recent pullbacks are bearish for the outlook in stocks.
“I’ve lived through too many bear markets,” he said via phone, noting that the lengthy bullish run for stocks, which has been primarily fueled by easy-money policies from the Federal Reserve to combat COVID, may be coming to a conclusion.
“If we’re honest with ourselves, this market really, really did unbelievable things in the last year and a half,” Acampora said.
Markets have been unsettled since November and fears about a Federal Reserve that will be aggressive in its current battle with rising inflation — stemming from supply-chain bottlenecks and increased demand as COVID fears take a back seat to consumerism — appeared to culminate on Wednesday with the Nasdaq Composite entering correction for the first time since March and crossing below a long-term trend line, its 200-day moving average for the first time in nearly two years within days of each other.
Many chartists refer to Acampora affectionately as the “godfather” of technical analysis.
A pioneer in the field of price-chart based trading, Acampora says he has mostly advised clients to be cautious.
He told MarketWatch on Friday that his own sentiment has shifted toward stocks: “If you had spoken to me on Tuesday I would have said that the market is going to correct [a decline of at least 10%] and I’m now talking 20% or more,” he said of his expectations for declines in stock benchmarks.
What’s changed for Acampora, besides the unsavory intraday action?
He says that signs that bullish appetite is waning is one reason, and that includes the decline in bitcoin
BTCUSD,
which he says isn’t an asset that he’s a fan of but does gauge it as a good sign of investor attitudes. He says that bitcoin sentiment has also aligned with…
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